Mohandas Pai, Kiran Mazumdar-Shaw spar over 'unknown' yogi in NSE matter

Governance experts call for further probe into the matter

Former NSE board member T V Mohandas Pai and Biocon chairperson Kiran Mazumdar-Shaw sparred over the unknown ‘yogi’ who had outsized influence at the decision making process at the National Stock Exchange (NSE), country’s largest bourse.

“Shocking lack of governance in NSE that was held up as a world class stock exchange,” tweeted Shaw on a news item headlined 'Yogi Ran India's Top Stock Exchange As Puppet Master: Regulator.'

Replying to her tweet, Pai wrote, “No yogi ran NSE! Please stop spreading such falsehoods! Do you really believe that a very sophisticated technology based stock exchange,one of the largest in the world, was run successfully by some vague Yogi? You are doing a disservice to all those great employees who worked 24x7 @NSEIndia.”

To which Shaw further replied, “So do we junk the Sebi report? The employees of NSE were innocent. But if indeed Chitra Ramakrishna did connive with an outsider it’s dangerously outrageous.”

Pai served on the board of NSE as a public interest director (PID) between 2016 and 2020.

An order issued by market regulator Securities and Exchange Board of India (Sebi) on Friday revealed Ramakrishna sought advice on crucial decisions from a spiritual guru in the Himalayas.

The order also talks about the former NSE boss sharing the exchange’s confidential information such as organisational structure, financial results and human resources policy to this unknown person, who went by the email address rigyajursama@outlook.com.

“The sharing of financial and business plans of NSE with an unknown person by the MD & CEO is a glaring, if not unimaginable, act that could shake the very foundations of the stock exchange. If such confidential and sensitive information of NSE could be blatantly, if not shamelessly, shared over official emails by Noticee no. 1 (Ramakrishna) one can only fathom how much more confidential information has been shared over private emails, phone or word of mouth,” says the Sebi order.

The regulator penalised NSE, Ramkrishna and her predecessor Ravi Narain for governance lapses in hiring of its chief operating officer (COO) Anand Subramanian.

The order mentions how Subramanian, who had no prior experience of working with a stock exchange, rose through the ranks thanks to the backing of Ramkrishna and the yogi.

The Sebi order states how Subramanian’s salary was hiked without any record of evaluation of his performance. “The NRC was informed that as he directly reported to the CEO, the CEO evaluated him and recommended the enhancement,” says the Sebi order.

“There seems to be something more than what meets the eye. This could require further investigation by other agencies, and FinMin needs to act expeditiously. The investigations seem incomplete as to the connection of this with the colocation scam at NSE,” said Shriram Subramanian, founder and managing director of InGovern.

Governance experts said the episode highlights the lapses at the board and fallout of concentration of power.

“This is what happens when there is absolute power given to someone. There are enough checks and balances such as the board and the NRC. However, often board meetings are rushed through. A very few board members have time to go through everything thoroughly,” said JN Gupta, managing director of Stakeholders Empowerment Services (SES).

Ramkrishna had tendered her resignation to NSE’s board at a meeting held on December 2, 2016 amidst the storm created by the colocation scandal.

Sebi in its order expressed disappointment with NSE’s board for not taking action against Ramkrishna.

“…board members… allowed Ramkrishna to exit through resignation despite having committed such bizarre misconduct as reflected from her email correspondence with a fictitious email address apparently belonging to Subramanian without taking any action in this regard. Moreover, NSE and its board also appreciated Ramkrishna on record while accepting her resignation with immediate effect,” says the Sebi order.

“The SEBI order highlights the utter misgovernance of NSE in the past. The exchange is quite successful financially, but financial success seems to have led to hubris and governance was given short shrift, and taken for granted.  It seems that everyone - the Board, the shareholders, the executive team members - at NSE was sleeping at the wheels and there were external influences that were driving many of the decisions. How could the COO have been appointed without the Nomination and Remuneration Committee (NRC) knowing the candidate's past?”added Subramanian.

Ramkrishna had tendered her resignation to NSE’s board at a meeting held on December 2, 2016 amidst the storm created by the colocation scandal.

Sebi in its order expressed disappointment with NSE’s board for not taking action against Ramkrishna.

“…board members… allowed Ramkrishna to exit through resignation despite having committed such bizarre misconduct as reflected from her email correspondence with a fictitious email address apparently belonging to Subramanian without taking any action in this regard. Moreover, NSE and its board also appreciated Ramkrishna on record while accepting her resignation with immediate effect,” says the Sebi order.